EMERGING MARKETS-Brazil's real leads Latin American FX higher as Fed calms rate hike fears

* Chile's economic activity up 0.8% in March * Latam's 7 largest economies to grow 1.4% this year - OECD * Brazil's March current account deficit widens * Latin American stocks up 2%, FX adds 1.2% (Updated at 1916 GMT) By Bansari Mayur Kamdar and Johann M Cherian May 2 (Reuters) - Currencies and stocks in Latin America climbed on Thursday led by Brazil's real after less hawkish-than-expected comments from the U.S. Federal Reserve, while investors assessed a surprise interest rate cut by Argentina's central bank. The MSCI's indexes for Latin American stocks and currencies gained 2% and 1.2%, respectively, tracking the global relief rally after Chair Jerome Powell signaled the Fed is still leaning towards eventual reductions in borrowing costs. "It's clear from his press conference that Powell is still itching to cut rates and will do so at the first opportunity," said Win Thin, global head of markets strategy at BBH Markets. The Brazilian real jumped 1.6% against the dollar, outpacing regional peers, while stocks in Latin America's largest economy gained 1.2%. Brazilian manufacturing activity improved in April, a Purchasing Managers' Index (PMI) survey showed, to 55.9 from 53.6 in March. On Wednesday, ratings agency Moody's revised Brazil's outlook to positive from stable, citing stronger economic growth while maintaining the Ba2 credit rating for the country. Meanwhile, Brazil's current account deficit stood at $4.6 billion in March, deeper than economists expected, but foreign direct investment at $9.6 billion topped expectations, central bank data showed. The Colombian peso climbed 0.3% against the greenback in a turbulent week after the central bank's 50 basis points rate cut on Tuesday roiled the currency. Mexico's peso, the currency of Latin America's second-largest economy inched up 0.1% versus the currency of its most important trade partner, the United States. Chile's IMACEC economic activity index grew 0.8% in March compared to the same month of the previous year, the central bank said on Thursday, landing well below the 2.0% growth expected by economists. The currency of top copper producer Chile rose 1.4% against the dollar, while number 2 producer Peru's sol climbed 0.7%. Data on Wednesday showed Peru's annual inflation rate slowed in April to 2.42%, its lowest level in three years and within the central bank's target range. In Argentina, stocks advanced 2.8%. The country's central bank slashed its benchmark interest rate by 1,000 basis points to 50%, its third cut in just three weeks as the entity grows increasingly bullish on the inflation outlook. Latin America's highest-income countries, with the exception of Argentina, will grow moderately this year and next because external demand will remain weak, the Organisation for Economic Co-operation and Development forecast. Key Latin American stock indexes and currencies at 1912 GMT: Latin American market prices from Reuters Stock indexes Latest Daily % change MSCI Emerging Markets 1055.33 0.94 MSCI LatAm 2476.40 2.01 Brazil Bovespa 127484.17 1.24 Mexico IPC 56833.29 0.19 Chile IPSA 6512.84 0.01 Argentina MerVal 1360388.69 2.781 Colombia COLCAP 1374.67 1.28 Currencies Latest Daily % change Brazil real 5.1105 1.58 Mexico peso 16.9626 0.13 Chile peso 945.6 1.42 Colombia peso 3898.56 0.37 Peru sol 3.723 0.86 Argentina peso 878.0000 -0.11 (interbank) Argentina peso 1020 1.96 (parallel) (Reporting by Bansari Mayur Kamdar and Johann M Cherian in Bengaluru; Editing by Alison Williams and Aurora Ellis )